Owner occupied commercial real estate loans

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The benefits of owner-occupied real estate

Read time 3 minutes

An Owner Occupied Commercial Real Estate Loan can help secure financing for the acquisition or refinance of an existing building. This may benefit an appreciating asset by having a lower monthly payment and eliminating uncertainty with leasing space. To qualify for this special type of financing, you must occupy 51% or more of your building, which can include common areas.

If you meet the applicable criteria, there are many benefits to Owner-Occupied Commercial Real Estate Loans that may reap valuable rewards for you and your business.

The Benefits

Own an appreciating asset. Your rent as a business owner goes toward paying the debt on the building instead of a third party. This reduction in debt may increase your equity and your net worth. Commercial real estate often increases in value faster than most investments.

Tax Breaks. Property ownership may come with additional tax write-off opportunities you would not get with renting. Consult with your CPA for more information.

Ease the sale of your business. If you choose to sell your business, building ownership decreases the risk of having to negotiate with a landlord to reassign or draft a new lease for your prospective buyer.

Retirement and estate planning asset. Owning a building gives you the opportunity to collect a monthly rental income from tenants. You also have the option to sell the building and cash out that equity.

The Commercial Banking team is available to answer any questions you may have about the qualifications required. 

Loan Options

There are several Owner-Occupied CRE financing options if you are considering this type of loan.

A Conventional CRE Loan is best if you have cash to put into the loan immediately. These loans often have the most competitive rates, require a minimum 20% down payment, and have fixed rate periods.

An SBA 504/7a Loan for CRE Acquisition is a great option for a buyer that is looking for longer fixed rates and terms. These loans have low rates and are a more flexible loan product that can include tenant improvements and equipment funding. They have a 10% down payment requirement for most buyers.

 


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